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How to Calculate Hourly Rate from Salary: A Simple Guide for Texas Workers

If you’re considering a job offer, asking for a raise, or comparing positions, it’s important to understand how much you actually make per hour. While salaried positions offer consistent pay, they can make it hard to know your true value—especially if you work more than 40 hours a week.

In this blog, we’ll explain how to calculate your hourly rate from salary, why it matters, and how to use that number to make smarter career and financial decisions.

Why Calculate Your Hourly Rate?

Knowing your hourly rate helps you:

• Compare job offers with different compensation structures
  
  
• Determine if you’re being fairly paid for your time
  
  
• Budget effectively
  
  
• Advocate for raises or negotiate contracts
  
  
• Calculate overtime or freelance rates
  
  
• Spot wage violations (especially if you work excessive hours)
  
  

This is especially important in Texas, where employment is often at-will and exempt vs. non-exempt classifications matter when it comes to overtime.

Step-by-Step: How to Calculate Hourly Rate from Annual Salary

Here’s the most common method to convert an annual salary into an hourly rate:

Step 1: Know Your Annual Salary

Start with your gross salary—your total pay before taxes and deductions.

Example:
Let’s say you earn $65,000 per year.

Step 2: Choose a Standard Work Schedule

Most full-time jobs are based on 40 hours per week for 52 weeks per year, which equals 2,080 work hours annually.

Formula:
Annual Salary ÷ 2,080 hours = Hourly Rate

Example:
$65,000 ÷ 2,080 = $31.25/hour

✅ Quick Reference Table

Based on 40 hours/week, 52 weeks/year

What If You Don’t Work a Standard 40-Hour Week?

If you regularly work more than 40 hours/week, your effective hourly rate may be lower than you think.

Example:

You earn $65,000 but work 50 hours per week (2,600 hours/year):

$65,000 ÷ 2,600 = $25.00/hour

📉 That’s a big drop from $31.25/hour—and it’s why understanding your hourly rate is crucial when evaluating your work-life balance.

How to Calculate Hourly Rate from Biweekly or Monthly Salary

If you’re paid biweekly or monthly, here’s how to convert that to an hourly rate.

Biweekly Salary to Hourly Rate

Divide by 80 (40 hours × 2 weeks)

Example:
$2,000 biweekly ÷ 80 = $25/hour

Monthly Salary to Hourly Rate

Divide by 173.33 (average hours worked per month)

Example:
$4,500 monthly ÷ 173.33 = ~$25.95/hour

Using Hourly Rate to Compare Job Offers

When comparing offers:

• Don’t just look at salary—calculate the hourly rate based on expected hours
  
  
• Consider benefits, paid time off, and bonuses
  
  
• Factor in commute time, workload, and stress level
  
  
• Ask: Is the pay worth the time I’m putting in?
  
  

Sometimes, a slightly lower salary with better hours or benefits can give you a higher real value per hour.

Hourly Rate for Contractors or Freelancers

If you’re self-employed or freelancing, use this formula to set your rate:

Formula:

(Annual salary goal + expenses + taxes) ÷ billable hours = hourly rate

Example:

• Salary goal: $80,000
  
  
• Expenses: $10,000
  
  
• Taxes: $20,000
  
  
• Billable hours/year: 1,500
  
  

($80K + $10K + $20K) ÷ 1,500 = $73.33/hour

💼 Contractors need to charge more per hour to cover business costs and unpaid time.

Texas Workers: Know Your Classification

Texas follows the Fair Labor Standards Act (FLSA), which defines exempt (salaried and not eligible for overtime) and non-exempt (hourly and eligible for overtime) classifications.

If you’re classified as exempt but work excessive hours, knowing your hourly rate helps determine whether you’re being paid fairly—or should consider renegotiating or filing a claim.

When to Talk to an Employment Lawyer

If you discover your hourly rate is:

• Below the federal minimum wage ($7.25/hour in Texas)
  
  
• You’re denied overtime as a non-exempt worker
  
  
• You’re being misclassified as exempt or a contractor
  
  
• You’re asked to work “off the clock”
  
  

You may have grounds for a wage claim or labor law violation.

📞 Contact The Lange Firm to review your situation confidentially.

Final Thoughts

Understanding how to calculate your hourly rate from salary empowers you to:

• Make smarter career decisions
  
  
• Compare job offers effectively
  
  
• Ensure you’re being fairly compensated for your time
  
  

✅ Whether you’re planning a career move or standing up for your wage rights, knowing your true value per hour is a key step toward financial clarity and professional confidence.